European equities rallied sharply Thursday following a temporary tariff pause by the U.S., igniting optimism across global markets. The DAX index in Germany soared 7.9%, its biggest one-day jump in over a decade. France’s CAC 40 gained 1.8%, and the FTSE 100 rose 5.7%, tracking gains seen on Wall Street and in Asia.
The boost came after President Donald Trump announced a 90-day suspension on new tariffs for most U.S. trading partners. This measure excludes China, on which tariffs were raised to 125% from 104%, deepening trade tensions with Beijing.
While the pause delivered short-term relief, uncertainty lingers. Existing 10% blanket tariffs on nearly all imports, along with levies on autos, steel, and aluminum, remain in place. Analysts caution that revenue demands tied to Trump’s tax cut plans could prompt further tariff escalations in the months ahead.
ING analysts warned: “This may not mark a full retreat from protectionism—Trump still needs funding for tax cuts.”
EU Responds, Volkswagen Flags Concern
European Commission President Ursula von der Leyen welcomed the pause, reiterating calls for a zero-for-zero tariff deal between the EU and the U.S. However, she noted that tariffs ultimately burden both businesses and consumers.
Despite this diplomatic overture, EU member states have approved retaliatory trade measures against Washington, preparing for a potential flare-up if U.S. policy hardens again.
In the corporate sector, Volkswagen (ETR:VOWG_p) reported weaker-than-expected Q1 results, citing tariff-related disruptions. The automaker:
- Suspended rail vehicle shipments from Mexico
- Held at port cars arriving from Europe
- Reported over 30% drop in EV sales in China
- Saw European EV sales more than double
The report underscores how swiftly trade uncertainty can ripple through global supply chains and weigh on earnings expectations.
Investors Eye U.S. Inflation Data
While Europe’s economic calendar remains light, investor focus is shifting toward the upcoming U.S. Consumer Price Index (CPI) for March. The data, due later Thursday, is expected to influence Federal Reserve policy expectations. However, many analysts believe the inflation figures may carry limited weight, as they precede Trump’s latest tariff hikes.
Meanwhile, crude oil prices slipped, reversing earlier gains, as concerns over a deepening U.S.-China trade conflict overshadowed short-term optimism from the tariff pause.
Key Market Movements:
- DAX: +7.9%
- FTSE 100: +5.7%
- CAC 40: +1.8%
- Oil: Down amid trade war concerns